1875: Specie Resumption Act
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Description
“No act of Congress exerted finally a more profound influence upon the country’s monetary, financial, and economic future than the Act to Provide for the Resumption of Specie Payments” signed into law by President Grant on January 14, 1875.” 1 Authored by Senator Edmunds of Vermont and introduced by Senator Sherman of Ohio, the bill provided for the redemption of American “greenbacks” in gold beginning January 1, 1879 and gave the Treasury Secretary unprecedented authority to manipulate the money supply. Grant saw the move away from Civil War soft money as necessary to prevent rapid inflation and revive commerce and business with a stable currency. The bill was also a result of the financial downfall of the Panic of 1873. To solve this economic crisis, legislators in Congress passed an inflation bill that would flood the market with one hundred million dollars in “greenbacks” to relieve the suffering businessmen and workers across the country. Grant, though, vetoed the bill believing that the measure was nothing but a slippery slope which would lead the country into further inflationary practices. Grant saw specie resumption as the only way to economic recovery. The Resumption Act was important for two reasons: reining in inflation, taming speculation and producing a stable dollar led to the enormous economic growth in the United States in the late 19th century and Grant’s move would turn the Republican party towards a commercial, pro-capital stance and make it the party of conservative fiscal policies.2
Related Events:
1834: 2nd Coinage Act; 1840: Independent Treasury Reform; 1869: Black Friday; 1874: Greenback Party formed
Sources:
Don C. Barrett, The Greenbacks and Resumption of Specie Payments, 1862-1879, (Cambridge: Harvard University Press, 1931), 181-193. Jean Edward Smith, GRANT, (New York City: Simon & Schuster, 2001), 575-584. "Money Market: The Specie Resumption Question in Congress", Brooklyn Eagle, 07 January 1876. " The Two Parties and the Money Question", Brooklyn Eagle, 08 July 1876.
Footnotes:
1 Barrett, Greenbacks, 182
2 Smith, GRANT, 582